Home Prices Fared Best in Markets Where Borrowers Chose Fixed Mortgages

Last updated on October 18th, 2010

Home prices fell the least in housing markets where most borrowers took out fixed-rate mortgages, according to a perspective by Freddie Mac deputy chief economist Amy Crew Cutts.

Cutts, who praised the fixed-rate mortgage for being an “American Economic Shock Absorber,” noted that home prices are down less than five percent in states where prime, FHA loan, or VA loan long-term fixed-rate mortgages are predominant.

“In fact, home prices have slipped two percent or less in the states with the highest percentages of these mortgages – South Dakota (85 percent), North Dakota (84 percent), and Texas (70 percent),” she wrote in a blog post.